What you need to know

SWIFT, the global interbank cooperative, will allow more than 11,000 financial institutions to conduct digital asset transactions on its network next year.

Industry experts described both the opportunities and challenges of the project in an exclusive interview with BeInCrypto.

SWIFT Global Interbank Property Tests

SWIFT, the global interbank cooperative, has announced a new initiative that will roll out across North America, Europe and Asia next year. When live trials begin, participating banks will be able to use the SWIFT network to conduct digital asset transactions. This program comes after various tests to determine the practicality of this system at the international level.

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SWIFT considers this program as an innovation in its long-term project: to create a single access point between the financial sector and the digital asset classes. This is certainly not the first attempt at such a project, as SWIFT conducted global CBCC trials earlier this year. David Pinger, CEO and founder of Warden Protocol, explained the project's findings in an exclusive interview.

“Connecting traditional financial systems to decentralized platforms will accelerate the adoption of tokenized assets by providing greater capital flow than traditional finance. Tokenization will also act as an enabler, closing the gap for institutional investors, making it conceptually easier to integrate digital assets into existing systems,” Pinger said.

Pinger lists a few major challenges for such an ambitious project: regulatory inconsistencies, privacy issues, cross-chain, etc. SWIFT has been anticipating these problems for years, but is already working on a solution. SWIFT says its key concern going forward is to cut off digital platforms or “digital islands”.

To address this threat, SWIFT focuses on building the largest and most extensive banking network. The press release mentions efforts to integrate other new bank-led networks with the Swift digital asset scheme. Will Weidt, head of ecosystem at Oasis Protocol, gave an exclusive interview with BeinCrypto to discuss the benefits of banks.

“I believe the SWIFT initiative brings us closer to achieving Web3's privacy goals. Currently, the Web3 Networks… are transparent about payments, allowing anyone to view wallet addresses and transaction histories. This level of transparency may not suit the needs of traditional banks that rely on SWIFT, he said.

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Basically, one of the biggest regulatory hurdles for the global banking system is quite simple: the need for privacy. Clients' sensitive financial information must remain confidential, and Wendt said Swift's background is well-suited to meet this need. Creating a seamless user experience will be essential in solving these problems, he said.

SWIFT plans to roll out this pilot program to more than 11,000 financial institutions next year. The company appears to be very confident in its ability to connect these banks to both “existing and emerging asset classes,” but did not cite any specific examples. If successful, this initiative could be truly game-changing.